Dive Brief:

• The volume of completed global mergers and acquisitions rose modestly in the first quarter compared to the year-earlier period, overcoming economic uncertainties and other headwinds that have chilled dealmaking, according to an analysis from Willis Towers Watson.

• A total of 166 mergers and acquisitions valued at over $100 million were completed globally during the first quarter, compared with 150 deals completed during 1Q23, an increase of 11%, according to the findings, released Wednesday. Also, five mega deals, valued at over $10 billion each, closed in 1Q24 compared with just one in the first three months of 2023.

• The research potentially shows “some light at the end of the tunnel” after a challenging year for M&A globally in 2023, according to David Dean, WTW’s managing director of M&A. “It’s too soon to say whether there will be a full market recovery, but conditions for M&A activity are improving,” he said in a press release. “Interest rates have stabilized and may decline at some point this year, and there is less competition for deals. As a result, last year’s wait-and-see attitude to dealmaking may soon be in the rearview mirror.”

Dive Insight:

WTW’s Quarterly Deal Performance Monitor, conducted in partnership with the London-based M&A Research Centre at Bayes Business School, is the latest in a series of recent studies pointing to a brighter M&A outlook for 2024 compared with the prior year.

A survey released in late January by Big Four accounting firm Deloitte found that an overwhelming majority (83%) of corporate and private equity executives expected their organization’s M&A deal volume to increase in 2024, up 14 percentage points over the past two years.

Those findings came on the heels of a Deloitte report showing that just over half (51%) of CFOs across North America expected that 1% to 10% of their company’s growth in the next three years will come from M&A. Nineteen percent of finance chiefs expected 11% to 50% of their organization’s growth in that period to result from dealmaking.

Several megadeals have already been completed in the first three months of this year, including Cisco System’s $28 billion acquisition of cybersecurity company Splunk, Bristol Myers Squibb’s $14 billion purchase of schizophrenia drug developer Karuna Therapeutics, and AbbVie’s $10 billion takeover of cancer drugmaker ImmunoGen.

The first quarter also saw major deal proposals that are still pending, including Capital One's $35.3 billion agreement to merge with Discover.

“Worries over a possible recession are dimming, and there are predictions for a turnaround in M&A completions, which are supported by a recent jump in IPO [initial public offering] activity,” Dean said in Wednesday’s release. “Additionally, private equity firms are facing heightened pressure to step up their M&A activity and utilize their committed capital. In fact, we may very well see a more active year ahead given the apparent uptick in deal announcements in late 2023 and early 2024.”

Still, M&A continues to face macroeconomic risks on top of geopolitical challenges and uncertainties related to the upcoming U.S. presidential election, WTW indicated.

First quarter M&A activity didn’t perform the same across the world, according to the analysis. Overall, it was a struggle in North America and Europe, where acquirers underperformed their regional index with 97 completed deals and 37 completed deals, respectively. The Asia Pacific region fared better, where dealmakers overperformed with 31 completed transactions.